diff --git a/integration-tests/replace.test.ts b/integration-tests/replace.test.ts
index e7ed23a2dc..0de23a04c7 100644
--- a/integration-tests/replace.test.ts
+++ b/integration-tests/replace.test.ts
@@ -61,4 +61,34 @@ describe('replace', () => {
       console.log('File replaced successfully. New content:', newFileContent);
     }
   });
+
+  it('should handle $ literally when replacing text ending with $', async () => {
+    const rig = new TestRig();
+    await rig.setup(
+      'should handle $ literally when replacing text ending with $',
+    );
+
+    const fileName = 'regex.yml';
+    const originalContent = "| select('match', '^[sv]d[a-z]$')\n";
+    const expectedContent = "| select('match', '^[sv]d[a-z]$') # updated\n";
+
+    rig.createFile(fileName, originalContent);
+
+    const prompt =
+      "Open regex.yml and append ' # updated' after the line containing ^[sv]d[a-z]$ without breaking the $ character.";
+
+    const result = await rig.run(prompt);
+    const foundToolCall = await rig.waitForToolCall('replace');
+
+    if (!foundToolCall) {
+      printDebugInfo(rig, result);
+    }
+
+    expect(foundToolCall, 'Expected to find a replace tool call').toBeTruthy();
+
+    validateModelOutput(result, ['regex.yml'], 'Replace $ literal test');
+
+    const newFileContent = rig.readFile(fileName);
+    expect(newFileContent).toBe(expectedContent);
+  });
 });
diff --git a/packages/a2a-server/src/agent/task.ts b/packages/a2a-server/src/agent/task.ts
index f8c756992a..af65015687 100644
--- a/packages/a2a-server/src/agent/task.ts
+++ b/packages/a2a-server/src/agent/task.ts
@@ -509,7 +509,8 @@ export class Task {
     if (oldString === '' && !isNewFile) {
       return currentContent;
     }
-    return currentContent.replaceAll(oldString, newString);
+    // Use split/join to ensure replacement
+    return currentContent.split(oldString).join(newString);
   }
 
   async scheduleToolCalls(
diff --git a/packages/core/src/tools/edit.test.ts b/packages/core/src/tools/edit.test.ts
index 7b98083e31..f3df1ead34 100644
--- a/packages/core/src/tools/edit.test.ts
+++ b/packages/core/src/tools/edit.test.ts
@@ -198,6 +198,22 @@ describe('EditTool', () => {
         'hello world',
       );
     });
+
+    it('should treat $ literally and not as replacement pattern', () => {
+      const current = "price is $100 and pattern end is ' '";
+      const oldStr = 'price is $100';
+      const newStr = 'price is $200';
+      const result = applyReplacement(current, oldStr, newStr, false);
+      expect(result).toBe("price is $200 and pattern end is ' '");
+    });
+
+    it("should treat $' literally and not as a replacement pattern", () => {
+      const current = 'foo';
+      const oldStr = 'foo';
+      const newStr = "bar$'baz";
+      const result = applyReplacement(current, oldStr, newStr, false);
+      expect(result).toBe("bar$'baz");
+    });
   });
 
   describe('validateToolParams', () => {
diff --git a/packages/core/src/tools/edit.ts b/packages/core/src/tools/edit.ts
index cb0418b1e4..6a2b58ae12 100644
--- a/packages/core/src/tools/edit.ts
+++ b/packages/core/src/tools/edit.ts
@@ -51,7 +51,8 @@ export function applyReplacement(
   if (oldString === '' && !isNewFile) {
     return currentContent;
   }
-  return currentContent.replaceAll(oldString, newString);
+  // Use split/join to ensure replacement
+  return currentContent.split(oldString).join(newString);
 }
 
 /**
diff --git a/packages/core/src/tools/smart-edit.test.ts b/packages/core/src/tools/smart-edit.test.ts
index 132d993306..bcad5b72ca 100644
--- a/packages/core/src/tools/smart-edit.test.ts
+++ b/packages/core/src/tools/smart-edit.test.ts
@@ -46,11 +46,11 @@ import {
   type Mock,
 } from 'vitest';
 import {
-  applyReplacement,
   SmartEditTool,
   type EditToolParams,
   calculateReplacement,
 } from './smart-edit.js';
+import { applyReplacement } from './edit.js';
 import { type FileDiff, ToolConfirmationOutcome } from './tools.js';
 import { ToolErrorType } from './tool-error.js';
 import path from 'node:path';
@@ -169,6 +169,22 @@ describe('SmartEditTool', () => {
         'hello new world new',
       );
     });
+
+    it('should treat $ literally and not as replacement pattern', () => {
+      const current = 'regex end is $ and more';
+      const oldStr = 'regex end is $';
+      const newStr = 'regex end is $ and correct';
+      const result = applyReplacement(current, oldStr, newStr, false);
+      expect(result).toBe('regex end is $ and correct and more');
+    });
+
+    it("should treat $' literally and not as a replacement pattern", () => {
+      const current = 'foo';
+      const oldStr = 'foo';
+      const newStr = "bar$'baz";
+      const result = applyReplacement(current, oldStr, newStr, false);
+      expect(result).toBe("bar$'baz");
+    });
   });
 
   describe('calculateReplacement', () => {
diff --git a/packages/core/src/tools/smart-edit.ts b/packages/core/src/tools/smart-edit.ts
index 3647b73246..0f8089e7f8 100644
--- a/packages/core/src/tools/smart-edit.ts
+++ b/packages/core/src/tools/smart-edit.ts
@@ -30,26 +30,7 @@ import {
 } from './modifiable-tool.js';
 import { IdeClient, IDEConnectionStatus } from '../ide/ide-client.js';
 import { FixLLMEditWithInstruction } from '../utils/llm-edit-fixer.js';
-
-export function applyReplacement(
-  currentContent: string | null,
-  oldString: string,
-  newString: string,
-  isNewFile: boolean,
-): string {
-  if (isNewFile) {
-    return newString;
-  }
-  if (currentContent === null) {
-    // Should not happen if not a new file, but defensively return empty or newString if oldString is also empty
-    return oldString === '' ? newString : '';
-  }
-  // If oldString is empty and it's not a new file, do not modify the content.
-  if (oldString === '' && !isNewFile) {
-    return currentContent;
-  }
-  return currentContent.replaceAll(oldString, newString);
-}
+import { applyReplacement } from './edit.js';
 
 interface ReplacementContext {
   params: EditToolParams;